Stocks opened slightly higher Wednesday, but quickly slipped into narrow losses as a sharp drop in oil prices countered rising tech stocks bolstered by a strong quarterly report from Analog Devices (ADI).
The Nasdaq, the S&P 500 and the Dow Jones industrial average all gave up early losses and dropped 0.2%. Early volume was mixed, lower on the Nasdaq, higher on the NYSE vs. action at the same time Tuesday.
Early Risers: : Verizon, Facebook, Analog Devices,
Oil prices slumped more than 2% in early trade, sending the price of West Texas Intermediate below $49 a barrel. The American Petroleum Institute releases its weekly inventory estimates later today, followed by the Energy Information Administration’s oil report on Thursday.
Oil stocks were under early pressure, with Chevron (CVX) off 0.6% and Exxon Mobil (XOM) down 0.5%. Energy filled out much of the downside among S&P 500 stocks, led by Transocean’s (RIG) 3% decline. Oil-related stocks posted nine of the S&P 500’s 10 worst losses on Tuesday.
Verizon (VZ) jumped to the top slot among Dow industrials, up 0.9% in early trade. Cisco Systems (CSCO) rose 0.4% after announcing an collaboration with IBM (IBM) aimed at integrating security offerings into more broad-ranging security solutions. IBM, also a Dow stock, rose 0.2%.
The big move in tech came from Analog Devices, which jetted 5% higher after reporting a big fiscal second-quarter earnings beat with a 61% gain in earnings per share. A 41% revenue increase met analyst targets, and management lifted its third-quarter earnings and revenue guidance above consensus views. The advance lifted shares out of a buy range, above an 84.34 cup base buy point.
Broadcom (AVGO) traded up almost 1%. The diversified chipmaker plans to report its fiscal second-quarter results after the market closes on Thursday. Shares are just beyond buy range, above a 226.51 buy point.
IBD 50 stock Nvidia (NVDA) climbed 1%. The stock continues to be extended above a 121.02 buy point in a late-stage base.
Icohr Holdings (ICHR), also an IBD 50 name, popped almost 2%. Shares are trading near new highs, more than 170% above their December IPO price.
Fashion accessories brand Michael Kors (KORS) tanked 10% at the open. The company reported fiscal fourth-quarter results that were stronger than expected, but guided first-quarter earnings below consensus targets.
Ore mining stocks posted early declines. Rio Tinto (RIO) shed 1%. Vale (VALE) and BHP Billiton (BHP) were down more than 1% each. U.S.-based ore miner Cliff’s Natural Resources (CLF) backed off more than 2%.
Coming Up: Chicago PMI, Pending Home Sales
The May Chicago Purchasing Managers Index is expected from Kingsbury International at 9:45 a.m. ET. Pending home sales numbers for April are due from the National Association of Realtors at 10 a.m. ET. The Federal Reserve’s May Beige Book report rolls out at 2 p.m. ET.
Europe’s markets gained strength in afternoon trade, with Frankfurt’s DAX up 0.8%, London’s FTSE 100 ahead 0.6% and the CAC-40 in Paris riding a 0.4% gain.
Markets in Shanghai and Hong Kong reopened to mixed results after a holiday break: The Shanghai Composite added 0.2% and Hong Kong’s Hang Seng Index dipped 0.2%. In Japan, the Nikkei 225 eased 0.1%.